A Guide to Buying Land

Whether you’re dreaming of building your dream home or investing in undeveloped land, buying land is an exciting venture. The process shares similarities with purchasing a home but entails unique considerations. In this guide, we’ll walk you through the essential steps to ensure a smooth land-buying experience.

Step 1: Decide Where to Buy Land

1. Location Matters: The cardinal rule in real estate is location. Consider proximity to amenities like grocery stores, schools, and emergency services. A property’s accessibility and convenience play a vital role in its potential for future value growth.
2. Zoning Regulations: Investigate city, county, and state zoning ordinances to ascertain if building on the chosen land is permissible. Be aware of any potential government plans that might impact the land’s value.
3. Topography: Assess the type of soil, tree coverage, and terrain elevation. These factors influence building costs and the land’s overall value. While topography assessment is technical, having experts on your team is invaluable.
4. Environmental Considerations: Identify any environmental risks such as flooding or protected flora/fauna. Complying with zoning regulations and assessing topography can highlight these concerns, but it’s crucial to inquire directly.
5. Road Access: Ensure there is legal access to the land. Easements, which grant permission to use private roads, may come with fees and shared maintenance responsibilities. This aspect is critical to consider before finalizing the purchase.
6. Utility Services: Check if the land has access to essential services like water, electricity, sewage systems, and cable lines. The availability of these services can significantly impact the land’s value.
7. CCRs (Covenants, Conditions, and Restrictions): Research any rules imposed by HOAs or local governments that may limit what you can do with the property. Ensure that your plans align with these regulations.

Step 2: Ensure You Have Enough Money to Buy Land

If You’re Buying Property to Build a Home:

• Paying cash for both the land and future home is ideal. If not, work with a real estate agent to understand land loan options.
• Secure separate loans for the land and homebuilding. Aim for a 15-year fixed-rate loan and save a substantial down payment of 5-10% or more to avoid PMI.
• Ensure you are debt-free, have a well-funded emergency fund, and that monthly payments for land and house loans do not exceed 25% of your take-home income.

If You’re Buying Property as an Investment:

• Only buy land as an investment if you can afford to pay for it in cash.
• Prioritize becoming debt-free, owning a paid-for home, and investing at least 15% of your pretax income into retirement accounts.

Step 3: Build a Team of All-Star Pros

• Assemble a team of experts including architects, contractors, project managers, and builders if you plan to build a home.
• If buying land as an investment, a trusted real estate agent is essential.

Conclusion:

Buying land is an exciting endeavor, but it requires careful consideration and a team of professionals to navigate the process successfully. By following these steps and enlisting the help of experienced professionals, you can turn your land ownership dreams into reality.